Hospitals across the state are rejoicing today over legislation Colorado Sen. Jerry Sonnenberg introduced Monday night to reclassify the Hospital Provider Fee.

The bill would eliminate the need for a proposed $264 million cut to the fee — a cut many hospitals say would be devastating.

“If this (fee cut) goes into effect, we’ll be in the red by about $350,000 to $500,000 next year,” says Trampas Hutches, administrator for Melissa Memorial Hospital in Phillips County, which ended 2016 with a small net operating income thanks to the fee. “It’s really going to hit us pretty hard as far as our bottom line, and our ability to offer services and provide care for the uninsured.”

The Hospital Provider Fee (HPF) is a fee levied on health care providers, which is then collected, matched with federal dollars and redistributed to help hospitals with the costs of Medicaid and coverage for uninsured patients.

The fee helps hospitals, particularly those in rural areas, offset the costs of serving low-income and uninsured populations who would otherwise be a burden to their bottom lines. The downside is that the HPF currently counts towards the state’s revenue limits under TABOR — the Taxpayer’s Bill of Rights — and any excess revenues will have to be taken out of state coffers and returned to taxpayers.

To combat an expected $500 million budget gap, Gov. John Hickenlooper proposed cutting the HPF by $195 million for the 2017-2018 fiscal year to keep state revenues below TABOR limits. That proposed cut has now grown to $264 million.

Sonnenberg’s bill would reclassify the fee so that it does not count towards TABOR limits, eliminating the need for the cut. The Colorado Hospital Association strongly supports the effort.

Hospitals and health care providers have also widely praised the bill, saying it will allow them to continue providing quality care, to move forward with construction projects and, for a few particularly vulnerable rural hospitals, to keep their doors open.

Hutches says that without Sonnenberg’s bill, offerings on the chopping block could include optometry services, dental services, chemotherapy and several procedures such as colonoscopies and joint replacements.

Large providers like Denver Health and UCHealth aren’t exempt from the cut’s negative impacts.

“As a safety net hospital, our net operating income is very small — anywhere from 1 to 4 percent — and we are especially vulnerable to any changes in funding,” says Josh Rasmussen, a spokesman for Denver Health.

UCHealth spokesman Dan Weaver says the UCHealth system is Colorado’s largest inpatient Medicaid provider, caring for nearly 20 percent of all Medicaid discharges in the state. “The Hospital Provider Fee really helps us take care of those Medicaid patients,” he says.

But it is perhaps the small, rural, critical access hospitals which are most vulnerable to the proposed changes.

Haley Leonard Saunders, a spokeswoman for Southwest Memorial Hospital in Montezuma County, says the HPF cut would make the difference between them being in the red and the black, too, and could force the hospital to scale back services.

“We’ll continue to operate, but there will be a point when we’ll have to make some really, really tough decisions,” she says. “The last thing you want to do is impact patient care. We can’t do that — we won’t do that.”

Just how much do Colorado hospitals stand to lose if the Hospital Provider Fee is cut by $264 million?

Check out the interactive map below.

Map created by Kelsey Ray with data from the Colorado Joint Budget Committee using BatchGeo. Click here to view in full screen.

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